Between weak markets and weak regulations: determinants of contracting in orchard farming in Albania

Abstract

This paper analyses the relations and contracting behaviour of orchard farmers with their customers in Albania. The study is based on a structured farm survey, including information about relations and contracting with clients, and a cluster analysis aimed at identifying key farm typologies with respect to contracting. As expected, most farmers rely on spot transactions. Formal contracts are used sparingly due to a lack of interest from buyers, small farm size and lack of trust in contract enforcement. However, farmers commonly use informal agreements/contracts as a substitute for formal ones. The most common differences between those farmers who engage in contracting and those that do not concern household size, the number of years in orchard production, and the amount of losses incurred.